We’ve all seen it: the seemingly endless march of new housing developments pushing further and further out from our urban cores. Freshly paved roads, gleaming new houses, the promise of affordable living… or is it? What if this outward expansion isn't driven by genuine demand as much as it is by a system designed for a quick buck and a hasty exit?
Think about the lifecycle of your typical exurban development. It's often made possible by significant subsidies, the most obvious being the massive public funding poured into the highways that connect these far-flung communities to jobs and amenities. But here's the catch: these subsidies overwhelmingly favor new construction. The ribbon is cut, the houses are built, and the initial infrastructure is in place. Cue the "honeymoon" period.
Early buyers, often enticed by lower prices in an "up-and-coming" area, move in. Property taxes are relatively low because the area isn't yet fully "established" and the true costs of maintaining that brand-new infrastructure haven't yet materialized in the tax base. This period often coincides with the early years of homeownership, where major maintenance like roof replacement might still be a decade or more away.
Our tax laws further incentivize this short-term perspective. Homeowners can deduct the interest they pay on their mortgages, and guess what? That's the bulk of their payments in the early years of the loan. By the time they start paying down more principal (the capital payments), and the inevitable realities of home maintenance and rising infrastructure taxes loom, what happens? They sell.
This creates what I call the nomadic exurbanite. They swoop in, capitalize on the subsidized initial phase, enjoy the lower initial costs and tax breaks, and then bail before the bill for long-term maintenance – both of their individual homes and the surrounding infrastructure – comes due. They ride the wave of new construction and loan subsidies, then cash out, often at a significant profit as the area gains perceived value in its "honeymoon" phase.
But who gets left holding the bag? The next wave of residents, often families hoping to build long-term lives in these communities. They move in just as the infrastructure starts to age, the need for repairs becomes apparent, and the tax burden to fund that upkeep begins to increase. They inherit the aging roads, the potentially strained utilities, and the looming costs of their own home maintenance, but they missed out on the initial, subsidy-fueled value increase.
Now, I know this isn't a popular opinion, but I genuinely believe the solution is to stop subsidizing new construction altogether. The interstate highway system is largely complete. We aren't facing a shortage of housing; in many ways, we have an overabundance of low-density neighborhoods, particularly for those just starting out. Much of the new construction we see is aimed at those already in the housing market, looking to "move up," which, while a personal aspiration, isn't necessarily a matter of national urgency requiring taxpayer subsidies.
If subsidies are still deemed necessary, shouldn't they be redirected? Instead of fueling endless outward sprawl, let's focus on the maintenance and improvement of our existing neighborhoods. Let's invest in making our current communities more vibrant, resilient, and sustainable. This would not only address existing infrastructure needs but also potentially create more stable and equitable housing markets for everyone, rather than incentivizing a cycle of subsidized flight and deferred costs. The era of the nomadic exurbanite, fueled by short-sighted subsidies, needs to come to an end.
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